Andre Agassi was once a famous tennis star. Several years ago, he decided to open a charter school in Las Vegas, with his name on it. It was going to be a national model for sending poor kids to elite colleges. But it failed and was eventually taken over by charter chain Democracy Prep. During the school’s first decade of operation, it went through six principals and multiple teachers. Former teachers said there was “a chaotic learning environment.”
Then Agassi went into partnership with an equity investor who put up $750 million for a new company that would build and lease charter schools. This is a very profitable venture.
Unfortunately, the charter schools it builds are forced into financial straits by the burden of the rent they must pay to Agassi and Turner.
In Detroit, a school built by their firm is closing, in part because of the crushing debt required to pay the landlords, Agassi and Turner.
A Detroit charter school is shutting down amid financial woes brought on by its lease agreement with an investment fund headed by tennis star Andre Agassi.
The closure of Southwest Detroit Community School, which was announced to teachers at an emergency meeting at the school Tuesday afternoon, caps a six-year existence marred by academic struggles and, more recently, dissatisfaction among parents and the teaching staff over the school’s direction.
“I feel one part betrayed, but also, I think it was inevitable,” said Mitzy Tripp, who has two children at the K-8 school, including one who will soon graduate from eighth grade. “But I honestly didn’t think that they would do this to the families.”
When Michigan lawmakers lifted the cap on new charter schools in 2011, it sparked a spree of more than a dozen school openings within a few years. Several have since closed, including Delta Preparatory Academy for Social Justice, which shut down abruptly at the beginning of this school year.
It’s the latest upheaval for a city where the school landscape has become severely fractured, forcing schools to compete for teachers, students, and resources without some of the safeguards that bring order to charter school systems in cities like New Orleans and Washington. Efforts to put such controls in place in Michigan have been stopped by well-funded political opposition…
The closure means the families of 347 students, many of them Spanish-speaking, will have to find a new school for their children. School changes have been shown to hurt student learning and behavior at school…
In the end, though, any hope for the school’s future collapsed under the weight of its lease with Turner-Agassi, an investment fund connected to the retired tennis legend that helped open the school as well as 89 others across the country.
The lease was designed like a residential rent-to-buy plan. The school would pay rent for the first few years, then, once it had enough students, it would buy the building outright. Turner-Agassi would make roughly $1 million on the deal, according to the lease agreement.
These arrangements aren’t unheard of in the charter sector. Michigan charter schools get no money from the state for facilities, often forcing them to rent buildings. Traditional schools generally own their buildings, taking advantage of public bonds that aren’t available to charter schools.
When the school failed to amass the more than $8 million it needed to buy the building, it paid a steep price. The rent went up sharply, increasing by 57 percent between 2017 and 2018, per the lease.
The school’s inability to keep up with its lease payments set off alarm bells within the Michigan Treasury Department, which flagged it as a “potential fiscal distress school” and required it to submit regular reports.
The rent, which grew to $769,910 annually this year, was higher than what other schools in the neighborhood pay. The payments suck up 19 percent of what the school brings in from the state to educate children.
Agassi and Turner made a handsome profit.
